Article excerpt

9. FRANCE (343)

Pensions

This is not a central topic in France, because most pensions and other "social security" benefits are provided by statutory schemes. Therefore, risks related to insolvency are marginal and concern a very limited part of the overall pensions granted. Private occupational pension plans, provided by employers, are not developed in France.

There is no equivalent state guarantee for pension benefits as there is for wages as described below. Nevertheless, some occupation pension schemes are offered to the employees, either by the effect of collective agreements or by a unilateral contract by the employer. Except in some exceptional cases, those schemes are externalized, which means that they are managed by private insurers.

The legal configuration is usually a triangular one: the pension scheme is set by a collective agreement or a unilateral decision of the employer that commits the employers towards his employees; the contributions and the benefits are managed under a "group insurance contract" signed between the employer and an insurance company. The French statutory law contains some provisions about the duties of the employers and of the insurers to make sure that the benefits will be paid.

In case the employer's insolvency in these situations, French courts admit that the benefits which are due to the employees will be paid--to a certain extent--by the AGS (the compulsory system of insurance covering the wages in cases of insolvency described below). But the courts do not require the AGS to cover the contributions that have not been paid to the insurer by the employer in case of insolvency.

Unpaid contributions to the statutory schemes have a privileged status in insolvency. By contrast, unpaid contributions to external pension funds are not privileged.

Other Employee Benefits

As far as how wage claims are treated during insolvency proceedings, both the French Civil Code and Labor Code have applicable provisions. Under the priority (privilege) instituted by the Civil Code, employees can apply it against the employer, even if no bankruptcy proceedings have been started. This priority covers the last six unpaid months (wages, severance pay, and damages for unfair dismissal). The Labor Code institutes a "super-priority" (superprivilege), whereby employees' wages claims are paid before even tax claims. This priority only covers the last sixty days before a bankruptcy case is opened, up to EUR 6172. This scheme under the Labor Code also includes some termination pay (notice period in case of permanent contracts; severance pay in case of fixed term contract). The scheme also covers vacation pay up to a special cap (thirty days' wages).

The Assurance Garantie des Salaires (AGS), the French wage guarantee scheme, covers a wide range of wages claims, including termination pay, severance pay, damages for unfair dismissal and other claims that can be related to the contract of employment (for instance some benefits due to the employees under a private plan contracted by the employer), either due to the employees before the bankruptcy proceeding is opened and during the bankruptcy procedure. The AGS insures wage claims up to 74,064 EUR and it is subrogated to the employees' rights in the insolvency proceeding, and it can avail itself of both the Civil Code "privilege" and of the Labor Code "superprivilege."

10. Germany (344)

Pensions

Pension claims receive no priority or preferences under the German Bankruptcy Code. Germany has adopted a flattened hierarchy of creditors where they are only either secured or unsecured creditors, and there are no exceptions for special groups like employees. The Insolvency Code of 1994 abolished all preferences.

A statutory insolvency insurance system administered by a mutual insurance association called the Pension Guarantee Fund (Pensions-Sicherungs-Verein Versicherungsverein aG-PSVaG) (PSVaG) that protects current and future beneficiaries in the event of employer insolvency. …

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